TALLAHASSEE, Fla. – Jan. 14, 2008 – Florida’s economy, already slumping from a depressed real estate market and a sharp decline in sales-tax collections, would be hit hard if the country slides into a recession, state economic forecasters are warning lawmakers.

Real estate markets could take longer to recover, jobs losses may be more severe, and the state budget – reeling from the loss of $4 billion in revenue in the span of just one year – could face even bigger cuts, forecasters said. That’s because the housing market has taken a bigger hit in Florida than in other states, and the impact has spread to retail sales and sales-tax collections, said Alan Johansen, director of the Senate Finance and Tax Committee.

Johansen was among a stream of economists and business analysts who updated lawmakers and a conference of business editors this week on Florida’s slipping economy. Though there is disagreement among national economists on the probabilities of the nation slipping into recession later this year, state economists said Florida is already suffering.

Among their conclusions:

• Home prices have dropped more in Florida than in most other states.

• Housing starts have fallen to two-thirds of where they were two years ago.

• Home sales have plummeted 30 percent in 17 of the 18 major metropolitan markets.

• Total state-tax collections have declined for two consecutive years, a circumstance not seen since 1970.

“The current situation looks like what we would expect with a recession,” said Johansen, a member of the state economic forecasting team. He told the Senate Finance and Tax Committee that at present there is no recession.

Jobs and wages continue to grow slightly, and “the statistics are masking what is happening.”

But there is no masking what impact the economy has had on Florida’s $70 billion state budget.

House Speaker Marco Rubio told lawmakers late Thursday to prepare to spend a week in February in committee meetings to cut an estimated $600 million more from this current year’s budget – which lawmakers had already reduced by about $1.3 billion late last year. They also will start removing an additional $2 billion from next year’s spending package.

“The budget situation is deteriorating,” Rubio wrote to members. “It is therefore critical that we begin to take serious steps to reduce the recurring expenditures.”

David Hart, vice president of the Florida Home Builders Association, said his colleagues “don’t think Florida is quite as rosy as the national forecast.” He predicted the market will start to recover in another year.

Help from Congress

Hart told the gathering of business editors in Tallahassee on Thursday that he is counting on Congress to prevent additional foreclosures and on state lawmakers to stimulate the economy and offer assistance to first-time home buyers.

Until then, he said, more big home-construction companies will file for bankruptcy.

University of Florida economist David Denslow told business editors that the odds of Florida having a recession if the nation doesn’t is only 5 to 10 percent.

Should the nation slide into recession, the state will too, he said – and “it will be a bit worse in Florida than it is nationally.”

The impact, he said, will be job losses, falling home values, rising foreclosures and postponed purchases of big-ticket items such as cars and home appliances.

That likely will result in a further drop in sales-tax collections, already expected to shrink by $2.4 billion between June 2007 and July 2008, state budget analysts told House lawmakers.

Property-tax receipts may decrease by 3 percent this year, the economists said, with schools statewide losing $233 million in funds. The economists also reduced the projected value of the proposed tax cut citizens will vote on Jan. 29 – from $12.4 billion to $9.2 billion over five years.

Gov. Charlie Crist and Senate President Ken Pruitt dismissed the bad economic news in their talks to the business editors.

Crist said he’s not worried about balancing the budget in the midst of the decline. “Seventy billion [dollars] is an awful lot of money, and we have an obligation to prioritize that,” he said.

Pruitt said the “warning signs are out there,” Opportunities are still here, he maintained, but “Florida is no longer going to be a cheap state.”

‘Not all bad’

“The days of moving to Florida with $500 in your pocket to move to a mobile home or cheap housing in paradise forever are over. And that’s not all bad,” Pruitt said. “Now we get to manage our quality of life.”

Rubio said the state is facing “an affordability problem,” though he added that he sees the decline as an opportunity to “remove things from our base budget” and “eliminate agencies.”

Any such talk angers state Democratic leaders.

“These are problems that are so systemic and deep that they are marginalized when you make it sound like it’s not a big deal,” said House Democratic Leader Dan Gelber. “The grand mistake we made was when money was rolling in. Republicans wanted to give tax breaks to companies and special interests and that did nothing to diversify our economy.”

Copyright © 2008 The Miami Herald, Mary Ellen Klas. Distributed by McClatchy-Tribune Information Services. Miami Herald staff writer Marc Caputo contributed to this report.

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